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Surely the data supports a US rate hike?

Surely the data supports a US rate hike?

The Euro maintained its momentum on Friday from Thursday’s surprising announcements via the European Central Bank (ECB) as the single currency continued to keep both Sterling and the US Dollar on the backfoot. Despite this move, the general opinion is that the Euro strength is temporary. However, it would seem that a number of the over-confident traders out there have re-adjusted their positions and are seemingly reluctant to start spreading liquidity just yet.

Updates from Friday suggest that the bloc currency will again run into some difficulties. However, we cannot rule out the overwhelming resilience of the the Euro – particularly as the market readjusts and begins to consider other concerns such as geo-political risk. With tensions in Syria rising and a rumoured divide amongst world leaders, it may not be too much longer before we begin to see a further shift and the Euro could begin to run into some headwinds.

After a quiet data day on Friday and with no tier one UK data released today, Sterling will be largely dependant data releases from other nations. Bank of England (BoE) Governor Mark Carney will testify before the European Parliament Committee on Economic and Monetary Affairs in Brussels this afternoon, only three days before the BoE is due to announce its latest monetary policy decision. On Tuesday the British Retail Consortium (BRC) Retail Sales Monitor is released just after midnight followed by the NIESR GDP Estimate. Super Thursday falls this week, but given Mark Carney’s stance on rate hikes this is unlikely to provide much uplift for the Pound.

The much anticipated Non-Farm Payrolls (NFP) number on Friday did not disappoint with a solid reading of 211K, 11K above market expectations. The data was highly anticipated as it is seen as the last major data release ahead of the Fed’s December monetary policy meeting, where the central bank is considering its first interest rate hike in nearly a decade.

It is worth noting that the October payroll growth which printed an impressive 271K, was actually revised up to 298K, consequently confirming an employment bounce back from August and September’s slowdown. Following that it would seem that there will be little to deter Yellen from rate lift off next week.

Data to watch: 3pm UK Mark Carney Speaks & US Labor Market Conditions Index. 8pm US Consumer Credit Change.

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